Team Profile: FICO 500 Approved Bank

Redondo Beach, November 2007: As you might expect this team experienced the highest level of non-performers throughout most of the simulation. Bad loans hovered around 1.00% for most of the game, which in the end wasn't all that terrible. The bank was clearly compensated for their increased risk taking, finishing with the highest ROE at 27.59%. (Good thing for them it was there #1 goal!)

The team's #2 goal was highest total asset growth which complimented their drive for higher returns. They also finished first in this goal with an annual asset growth rate of 40.40%.

Without a doubt this team was rewarded in overall score from investors and peers posting the highest stock price at $95.60 per share.

Unfortunately the team didn't fair so well on their #3 and #4 goals, placing last in both. Their #4 goal was lowest non-core funding dependence which seemed to work in direct conflict with their aspirations to grow the bank. Compounding the problem was their slow start in grabbing a decent market share of core deposits in the beginning. Eventually they caught-up, and finished king-of-the-hill with $170 million in non-maturity deposits. We can only wonder what would have happened if they would have priced aggressively from the start. As it is, much of their growth was funded by expensive (compared to core deposits) fed funds sold and then long-term debt. This debt was variable rate which created some margin pressure at the end when market rates flattened and then rose 25 basis points.

This team obviously finished the largest of all the banks at over $400 million in total assets. This quick growth was not lost on the city's lead examiner who initially penalized the team with a combination of lower ratings for both liquidity and capital. (This despite the team president's underhanded attempt to earn points by yucking-it-up about the Kansas J-hawks football and basketball teams....rock chalk...YUCK!)

With risk-based capital levels dipping below 9.00% the team was eventually forced to issue $10 million in new capital in the last quarter.

In the end, great investor relations, decent goal management, and a final recognition of examiner concerns landed this team in top 80 banks of the BANKdynamics national ranking.